The Employee Provident Fund (EPF) offers a life insurance benefit to all its members through a scheme called the Employee Deposit Linked Insurance (EDLI). This insurance provides a life cover of up to Rs. 7 lakh, offering financial security to the employee’s family in case of their unfortunate demise. Know more about EDLI in EPF – Benefits and Claim Process, and the eligibility of EDLI. In this guide, we will discuss everything you need to know about EDLI, including eligibility for EDLI, premiums, benefits of EDLI, and the claim process.
What is Employee Deposit Linked Insurance (EDLI) :
EDLI stands for Employee Deposit Linked Insurance. It is one of the three schemes managed by the Employees’ Provident Fund Organization (EPFO), with the other two being the Employee Provident Fund Scheme (EPF) and the Employee Pension Scheme (EPS). The EDLI scheme was introduced in 1976 to provide life insurance coverage to EPF members. Major updates were made to the scheme in 2016, 2018, and 2020, with a notification issued on April 28, 2021. It is a group insurance scheme, meaning all PF members are collectively covered.
Who Pays the EDLI Premium :
As an employee, you do not need to pay anything for EDLI. The entire premium is paid by your employer. The monthly premium is calculated as 0.5% of the PF wage, which includes the employee’s basic salary and dearness allowance (DA). For example, if your monthly wage is Rs. 10,000, the premium will be 0.5% of this amount, which is Rs. 50. However, this calculation is not done individually but is based on the collective PF wage of all employees in the organization. The maximum wage considered for EDLI calculations is Rs. 15,000, so even if you contribute more, the premium will be capped at Rs. 75 per employee.
Eligibility for EDLI :
If you are an EPF member, you are automatically eligible for EDLI benefits. The coverage lasts as long as you are employed in a company covered under EPFO. Some companies may offer their group insurance to provide better benefits than EDLI, but this is rare.
Common Misconceptions about EDLI
Many people believe there is a minimum service period of 12 months to qualify for EDLI benefits. This is not true. You are covered by EDLI from day one of your EPF membership, though benefits might be lower for those with less than 12 months of service.
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What are the Benefits of EDLI :
The EDLI scheme provides coverage for both work-related and non-work-related deaths, including deaths due to illness or accidents. The benefit amount varies based on the employee’s service period and salary:
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1. If Service is More Than 12 Months:
The calculation is based on the formula: EDLI Amount = 35 x Average Monthly Wage (last 12 months) + 50% of the average PF balance (with a maximum cap of Rs. 1.75 lakh).
For employees earning a capped wage of Rs. 15,000, the maximum benefit can go up to Rs. 7 lakh.
2. If Service is Less Than 12 Months:
Benefits are lower but still available. The formula is based on the average PF balance up to a maximum of Rs. 50,000 + 40% of the amount above Rs. 50,000 (capped at Rs. 1 lakh).
The amount is then multiplied by 1.2 to account for an additional 20% as per the scheme’s rules.
How to Claim EDLI Benefits :
There are two ways to claim EDLI benefits: online and offline.
Online Claim Process
1. Nomination must be filed in advance through the UAN Member Portal.
2. Log in to the UAN Member Portal using the UAN number and nominee’s Aadhaar details.
Go to the “Death Claim” section, and upload all required documents (e.g., death certificate, cancelled cheque).
Verify details with Aadhaar OTP, and submit the form.
3. Claims are generally processed within 30 days.
Offline Claim Process
1. Download the Composite Death Claim Form from the EPFO website.
2. Submit all required documents with the employer’s seal and signature.
3. If the company is closed, get the form signed by a gazetted officer or bank manager and submit it to the local PF office.
4. Similar to the online process, claims are expected to be processed within 30 days.
If there are any delays beyond 30 days, the EPFO must pay 12% interest on the pending amount.
Important Points for Employees and Employers
1. For Employees:
File your nomination form to avoid issues for your family in case of a claim.
Inform your family about the EDLI benefits linked to your UAN.
Keep your UAN number in a safe place and share it with at least one trusted family member.
2. For Employers:
Ensure accurate exit reasons are filed, especially in cases of death.
If an employee passes away, use “Death in Service” or “Death Away from Service” as the exit reason.
Avoid marking employees as “left” if they are absent due to illness or accident. Instead, mark them as “absent” and submit a nil PF challan.
The EDLI scheme is a valuable benefit that provides financial security to the families of PF members. By understanding the eligibility, benefits, and claim process, both employees and employers can ensure that they make the best use of this life insurance scheme. Filing nominations and keeping records up-to-date can help ensure that your family can easily claim this benefit when needed.
This guide is intended to help PF members and their families navigate the EDLI scheme effectively. Remember, it’s not just insurance; it’s a financial shield for your loved ones when they need it the most.
FAQs about EDLI in EPF
1. What is EDLI?
EDLI (Employee Deposit Linked Insurance) is a life insurance scheme for EPF members, providing coverage of up to Rs. 7 lakh.
2. Who pays the EDLI premium?
The employer pays the premium, capped at Rs. 75 per employee.
3. Who is eligible for EDLI?
All EPF members are eligible from day one of their membership.
4. Is there a minimum service requirement?
No, EDLI benefits are available from the start of EPF membership.
5. What are the benefits of EDLI?
- More than 12 months of service: Up to Rs. 7 lakh.
- Less than 12 months of service: Based on PF balance, capped at Rs. 1 lakh.
6. How to claim EDLI benefits?
- Online: File a claim on the UAN portal with required documents.
- Offline: Submit a Composite Death Claim Form to the PF office.
7. What documents are needed for a claim?
Death certificate cancelled cheque, and ID proof of the nominee.
8. What if the claim is delayed?
EPFO pays 12% interest on claims delayed beyond 30 days.
9. How can employees prepare for claims?
File nominations on the UAN portal and share UAN details with family.
10. Can employers provide better benefits?
Yes, but it’s uncommon.
